What companies do CD4 LP Funds own as of Sept 2022?

Summary: In prior posts using CD2 as an example, I explained that if E&P were a truly responsible entity it would be adding value for shareholders by providing a continuous flow of accurate, meaningful information on what each CD fund owns rather than a black box or incomplete, out-of-date or misleading data. 

In this post, I will utilise the disclosures in the Explanatory Memorandum to provide some insight into what CD4 owns. This is particularly relevant for CD1/2/3 shareholders as CD4 companies (and their marked-up valuations) will suddenly become their biggest exposure if the Merger Proposal succeeds.

An opaque CD4 portfolio is a minefield for CD1/2/3 investors if the merger vote succeeds!

Details:

1. CD4 Underlying Fund Manager Allocations (30 June 2022 reviewed end of August)

Due to the Merger Proposal disclosure requirements, for the first time ever, CD4 fund investors got to see a relatively up-to-date snapshot of where funds are currently invested (inclusive of changes in holding values):

Explanatory Memorandum pg143

Now we can create an up-to-date summary of Underlying Fund Manager holding values:

Columns: 30 Jun 2022 Holding Value / USD Original Committed Capital / Fund Name / Portfolio page.

1. A$56.1m. (US$32.5m) US Select Direct Private Equity II. Portfolio/Company page.
- CD4 announcements mention TopGolf, ReSource Pro Holdings (Mar 2022 AR)
- CD4 announcements mention exits in ReSource Pro Holdings (Mar 2022 AR)

2. A$34.6m. (US$12.5m) CORE Industrial Partners Fund I. Portfolio/Company page.
 7 investments (Pitchbook). Unlisted on CD Funds site!
- Pitchbook Last Deal Date: 11-Jan-2022
- CD4 announcements mention Prototek, Fathom Digital Manufacturing  (Mar 2022 AR)

3. A$31.4m. (US$10m) Nosara Capital Fund I. Portfolio/Company page. (Alt1)
- 6 investments (Pitchbook). CD Funds site lists 0!
- Pitchbook Last Deal Date: 10-Dec-2020

4. A$25m. (US$10m) Elephant Partners II. Portfolio/Company page.
- 6 investments (Pitchbook). CD Funds site lists 0!
- CD4 announcements mention exits in A Cloud Guru, KnowBe4 (Mar 2022 AR).

5. A$22.1m. (US$12.5m) Wavecrest Growth Partners I. Portfolio/Company page.
- 10 investments (Pitchbook). CD Funds site lists 0!
- Pitchbook Last Deal Date: 28-Sep-2021
- CD4 announcements mention BigTime Software, Building Engines (Mar 2020 AR), n Login VSI (Mar 2020 AR)

6. A$18.9m. (US$12.5m) Gainline Equity Fund. Portfolio/Company page.
- 6 investments (Pitchbook). CD Funds site lists 0!
- Pitchbook Last Deal Date: 13-Jul-2021
- CD4 announcements mention SouceHOV Tax (Mar 2020 AR).

7. A$13.4m. (US$10m) Trivest Fund VI. Portfolio/Company page.
- 15 investments (Pitchbook). CD Funds site lists 1.
- Pitchbook Last Deal Date: 20-Sep-2022
- CD4 announcements mention AG Adjustments, PCRK Holdings <Massage Envy>, BCC Engineering (Mar 2020 AR), Bluegrass Orthopaedics,  Lubrication Engineers (Mar 2022 AR)

8. A$11.4m. (US$12.5m) Incline Elevate Fund. Portfolio/Company page.
- 6 investments (Pitchbook). CD Funds site lists 0!
- Pitchbook Last Deal Date: 19-Jan-2022
- CD4 announcements mention Wholesale Supplies Plus, BFG Supply Company (Mar 2020 AR), Revival Animal Health, The Mad Rose Group, Edko, Road Tested Parts <Weaver Automotive> (Mar 2022 AR)
- CD4 announcements mention exits in Wholesale Supplies Plus, BFG Supply Company (Mar 2022 AR).

9. A$7.8m. (US$10m) Astra Partners I. Portfolio/Company page.
- 3 investments (Pitchbook). CD Funds site lists 0!
- Pitchbook Last Deal Date: 05-May-2020
- CD4 announcements mention Communication Technology Services, DartPoints (Mar 2020 AR).

10. A$7.7m. (US$7.5m) Quad Partners V. Portfolio/Company page.
- 11 investments (Pitchbook). CD Funds site lists 0!
- Pitchbook Last Deal Date: 07-Apr-2021
- CD4 announcements mention Streamline Brands, The Gardner School (Mar 2020 AR), AmplioSpeech, Quantum IT Holdings <InPlace> (Mar 2022 AR)
- CD4 announcements mention exits in Hands-On Learning Solutions, SchoolAdmin Holdings

11. A$6.9m. (US$10m) Tower Arch Partners II. Portfolio/Company page.
- 8 investments (Pitchbook). CD Funds site lists 0!
- Pitchbook Last Deal Date: 25-May-2022
- CD4 announcements mention SnugZ USA (Mar 2020 AR),  ProChem Energy Services, Creedence Energy Services Holdings, LifePort Holdings (Mar 2022 AR).

11. A$4.2m. (US$5m) Rucker Park Capital Fund (Room40 Ventures). Portfolio/Company page.
- 13 investments (Pitchbook). Unlisted on CD Funds site!
- Pitchbook Last Deal Date: 29-Mar-2022

Finally, investors have a useful starting point for understanding with who they are currently invested and, in combination with at least basic company lists on the CD funds website (if E&P ever gets around to providing them!), could do their own research into current CD4 fund holdings.

E&P has failed dismally to provide even minimal info for CD4. Almost all the LP Fund pages have no companies listed at all! Yet, it wants CD1/2/3 investors to merge with the much bigger CD4, paying the full marked-up price for its assets, wait several years before being able to fully exit, and trust in its recommendations that this is in their best interests!

Below, I will compile (over time) essential details I can dig up on the specific companies held, dates, websites, exits and revaluations.


2. What's the most recent info on CD4 Carrying Value vs Paid In?

In the CD Private Equity Fund Series Updates, Carrying Values vs Paid In Values are now disclosed. The most recent update is August 2022 (data from 31 March):

CD Private Equity Series Update - August 2022

As you can see, many CD4 LP funds have been marked-up significantly. The average age of remaining investments is only 2.4 years. Some of the Net IRR's are extremely high but are mostly unrealised. Many of these mark-ups may well have been justified at the time, but valuation dates are of 31 Mar 2022 and lag both public markets and the effect of higher long-term rates on longer-duration valuations and borrowing.

Private equity valuation is complicated and I won't attempt to grossly simplify. Suffice to say that investors in CD1/2/3 chose to be invested in those specific portfolios, at that time in the macroeconomic cycle, at the realisation stage of those companies, with rising cash levels and zero (or very little) reinvestment. Simply, throwing them in to majority CD4 exposure when E&P can't even spend 20 minutes per LP Fund listing the companies each LP Fund owns is a breach of responsible entity duties.

Because of E&P's failure to provide even minimal, accurate information, diligent CD1/2/3 investors have to spend unpaid hours of their own time to get whatever limited understanding of CD4 they can using their own resources.


3. US Select Direct Private Equity II Fund: Companies, websites, dates, transactions, revaluations, exits

a. Jet Linx
- Company website

b. Integrated Energy Services (iES) now iES MACH
- Pitchbook profile
- Company website

c. Next Level Apparel
- Co-investment with Blue Point Partners
- Company website

d. Spincar (now Impel)
- Company website
- Pitchbook profile
Last valuation: 01-Sep-2022

e. Nosara Capital Management

f. Topgolf Entertainment Group
- Pitchbook profile
- Company website

g. CAPP & Co (now Cappfinity)
- Pitchbook profile
- Company website

h. ReSource Pro
- Exited. Confirmed Dec 2021 Qtr Update.
- Pitchbook profile
- Company website <error>

i. KnowBe4
- CD3 and CD4 both have exposure to Knowbe4 through investment in Elephant Partners Fund I, (CD3) and through Elephant Partners Fund II, L.P (CD4) and US Select Direct Private Equity Fund II (CD3 and CD4). Confirmed June 2021 Qtr Update.
- IPO 21 Apr 2021. NASDAQ:KNBE


4. CORE Industrial Partners Fund I. Fund: Companies, websites, dates, transactions, revaluations, exits

a. Arizona Natural Resources

b. MedLit Solutions
- Exited: Fund Notice

c. Prototek
- Exited: Fund Notice

d. 3DXTECH

e. Cadrex Manufacturing Solutions

f. Fathom

g. Incodema

h. J&K Ingredients

i. RE3DTECH

j. Saylite
- Confirmed in Mar 2020 AR


5. Nosara Capital Fund I: Companies, websites, dates, transactions, revaluations, exits

a. OrderMark
- Confirmed in Mar 2020 AR

b. LeafLink
- Confirmed in Mar 2020 AR

c. Provi
- Confirmed in Mar 2020 AR

d. Reibus International

e. Chiper

f. Alerzo

g. Smunch.co

h. Brainbase


6. Elephant Partners II: Companies, websites, dates, transactions, revaluations, exits

a. A Cloud Guru
- Confirmed in Mar 2020 AR

b. Revelio Labs

c. DebtBook

d. Postscript

e. Keelvar

f. Mosyle

g. Planhat

h. ThreatLocker Inc

i. Triple Whale

j. Pedago


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